WEBVTT - Chief Future Officer: Katie Fogertey, Shake Shack 0:00:03.680 --> 0:00:07.200 Shake Shack was looking to hire a new chief financial officer. 0:00:07.880 --> 0:00:10.760 Fast casual restaurant chain found the perfect candidate in an 0:00:10.840 --> 0:00:15.880 unexpected place, Wall Street. I had worked at Coleman Sachs 0:00:15.960 --> 0:00:19.080 for about sixteen years. I was covering the restaurant in Factor. 0:00:19.280 --> 0:00:21.360 Katie and I worked together for a long time. She 0:00:21.520 --> 0:00:24.040 was an analyst covering our stock. The day that I 0:00:24.079 --> 0:00:26.360 knew I was looking for a new CFO, the day 0:00:26.360 --> 0:00:29.000 that I announced it, I went to our recruiter and 0:00:29.040 --> 0:00:31.760 I said, what about Katie foger I remember working with her? 0:00:32.360 --> 0:00:35.120 Do you think she might be interesting this? That same day, 0:00:35.560 --> 0:00:37.840 she had heard about it and went to her family 0:00:37.880 --> 0:00:40.360 and said, this is the job I want. Literally that 0:00:40.440 --> 0:00:42.680 same day. It was something that you know, I always 0:00:42.760 --> 0:00:44.919 wanted to take a more of a leadership role at 0:00:44.920 --> 0:00:48.360 a company. We hit it off. Katie Fogerty spent the 0:00:48.360 --> 0:00:52.080 first part of her career asking hard questions about corporate strategy. 0:00:52.440 --> 0:00:55.960 Now she's responsible for answers. I think that there's a 0:00:56.040 --> 0:00:58.560 number of things that a cell side research analyst can 0:00:58.680 --> 0:01:01.040 lend to a company, especially to a company that is 0:01:01.040 --> 0:01:03.920 in you know, high growth mode. One. It's just really 0:01:04.240 --> 0:01:08.280 a very firm, you know, ability to analyze strategic decisions, 0:01:08.440 --> 0:01:11.360 um to really get into the numbers, into the models, 0:01:11.400 --> 0:01:15.280 and to have a firm view of different scenarios out there. 0:01:15.520 --> 0:01:20.600 When those Wall Street executives move into the company seat, 0:01:20.720 --> 0:01:25.120 they bring an understanding, hopefully of the fundamentals company sector, 0:01:25.720 --> 0:01:27.679 but also what it means to be a stock. The 0:01:27.760 --> 0:01:33.120 total stakeholder perspective includes shareholders. How are we measuring the 0:01:33.120 --> 0:01:37.600 incrementality of a great offer like this? Katie's skill set 0:01:37.720 --> 0:01:41.080 so uniquely is able to harvest in her mind so 0:01:41.160 --> 0:01:46.240 much data and information turn it quickly into tremendous insights 0:01:46.640 --> 0:01:49.240 that end up driving our strategic priorities. That is her 0:01:49.280 --> 0:01:51.919 sweet spot. I look at a CFO from Wall Street 0:01:52.160 --> 0:01:56.600 as someone who can bring a breath of fresh air 0:01:57.440 --> 0:02:01.280 to a business that often can become very in brid 0:02:01.520 --> 0:02:06.160 They're extremely grounded in data, They're curious about data, They're 0:02:06.160 --> 0:02:08.600 pushing the data. They know what to do with the 0:02:08.760 --> 0:02:12.160 data and tie that into telling the story. There's a 0:02:12.160 --> 0:02:14.839 reality check that Katie brings to the business to say, 0:02:14.840 --> 0:02:16.000 you know, and I know, I think, I know you 0:02:16.160 --> 0:02:18.680 think this, but let me tell you what the data 0:02:18.720 --> 0:02:22.200 is really telling us here. She's still looking at data 0:02:22.280 --> 0:02:24.960 to predict the future. Only now she's taking it a 0:02:25.000 --> 0:02:27.440 step further. Before it was a lot of kind of 0:02:27.440 --> 0:02:30.960 sitting almost in an armchair type basis and and and 0:02:31.080 --> 0:02:34.400 analyzing different and now, you know, pieces of information to 0:02:34.520 --> 0:02:37.360 see where I thought the best investment dollar would be allocated. 0:02:37.720 --> 0:02:41.360 Here it is actually driving a plan of how we 0:02:41.440 --> 0:02:46.520 can best maximize shareholder returns. It is about leveraging data analytics, 0:02:46.680 --> 0:02:49.880 driving real insights through you know, not just your own 0:02:49.919 --> 0:02:53.600 guest data, but leveraging statistical models UM and and really 0:02:53.639 --> 0:02:57.639 kind of figuring out where the best strategic decisions will 0:02:57.720 --> 0:03:00.400 be made over time. This is an industry that really 0:03:00.480 --> 0:03:03.799 needs that type of analysis. That helped the Strategic vision 0:03:04.320 --> 0:03:06.640 UM now more than ever, and so it was incredibly 0:03:06.680 --> 0:03:09.680 exciting to start to apply that here at shake Shack. 0:03:22.919 --> 0:03:25.359 Shake Shack began as a humble hot dog card in 0:03:25.440 --> 0:03:28.720 New York's Madison Square Park. It opened his first restaurant 0:03:28.760 --> 0:03:31.079 as a kiosk in that park in two thousand four. 0:03:31.400 --> 0:03:33.840 A decade later, there were more than sixty shake Shack 0:03:33.919 --> 0:03:37.040 restaurants around the world, and in early two thousand fifteen, 0:03:37.200 --> 0:03:41.640 the company went public. At the end of one shake 0:03:41.680 --> 0:03:45.360 Shack and its licensed partners operated nearly four hundred locations 0:03:45.400 --> 0:03:49.000 and sixteen countries. At least sixty more are expected to 0:03:49.000 --> 0:03:52.160 open by the end of We always feel like we're 0:03:52.160 --> 0:03:54.200 just getting started at shake Shack somehow, you know. We 0:03:54.280 --> 0:03:57.080 kind of describe ourselves as a public startup. We have 0:03:57.160 --> 0:04:00.600 a huge footprint and white space out there that we 0:04:00.640 --> 0:04:03.280 can grow globally, and we're going to continue to do that. 0:04:03.640 --> 0:04:06.400 The pace of expansion is nothing new for this company, 0:04:06.680 --> 0:04:10.320 but maybe different is the shape. Shake Shack has thrived 0:04:10.360 --> 0:04:15.040 in high density urban locations, which provided revenues before the 0:04:15.080 --> 0:04:19.599 pandemic but returned to office patterns during COVID have been unpredictable, 0:04:19.920 --> 0:04:23.520 hampering sales growth in cities. Now shake Shack is exploring 0:04:23.560 --> 0:04:27.600 new formats as it extends its footprint in suburbs. This 0:04:27.680 --> 0:04:30.360 is not just a reaction to COVID. This is the 0:04:30.440 --> 0:04:32.520 stuff that we've been working on before. What COVID did 0:04:32.960 --> 0:04:37.000 was accelerated the pace and excitement. Frankly, for some of 0:04:37.000 --> 0:04:39.680 the things that we've been planning before, drive through amongst 0:04:39.720 --> 0:04:42.120 them as the most important. We were right at a 0:04:42.160 --> 0:04:45.440 pivotal moment of thinking drive throughs were obsolete, and then 0:04:45.520 --> 0:04:47.839 COVID hit and it was a saving grace. When you 0:04:47.880 --> 0:04:51.800 get out into the suburban areas, drive in becomes incredibly 0:04:51.839 --> 0:04:56.159 important because that's convenience and if a significant percentage of 0:04:56.200 --> 0:04:59.400 your businesses drive up, you need a smaller facility so 0:04:59.640 --> 0:05:02.640 the can be smaller. This is the first time the 0:05:02.640 --> 0:05:05.080 company has ever you know, put in and drive through. 0:05:05.120 --> 0:05:07.240 We opened up our first one in December of last year. 0:05:07.520 --> 0:05:12.359 We have six open, very exciting stuff. Drive through lanes 0:05:12.400 --> 0:05:15.840 offer long term opportunities to build revenue and increase margins, 0:05:16.200 --> 0:05:19.440 but right now they carry a higher price tag. Overall, 0:05:19.560 --> 0:05:22.400 we've seen an you know, arise in our build costs. 0:05:22.480 --> 0:05:25.000 We talked about ten to fifteen percent higher build costs 0:05:25.000 --> 0:05:27.839 across the board. Things are just costing more um. It 0:05:27.880 --> 0:05:31.320 makes site selection ever more important. It makes all of 0:05:31.360 --> 0:05:33.200 the work that we do in real estate and that 0:05:33.240 --> 0:05:37.200 whole process, you know, incredibly more important. Since Katie Fogerty 0:05:37.200 --> 0:05:41.360 became CFO of shake Shack in June, inflation has risen 0:05:41.400 --> 0:05:44.719 at a record rate, making her job that much harder. 0:05:44.960 --> 0:05:49.320 Everything that enters our business, commodities, foods, cost of building 0:05:49.320 --> 0:05:52.960 restaurants is getting more expensive. I don't see that ending 0:05:53.200 --> 0:05:56.039 anytime soon. How that We've got to continue to plan 0:05:56.160 --> 0:05:57.720 for it. And if you look at the price of beef, 0:05:57.800 --> 0:06:00.200 if you look at the price of dairy eggs, of 0:06:00.240 --> 0:06:03.479 these core things in paper and packaging, it's just meaning 0:06:03.480 --> 0:06:06.560 that everything costs us more and more and more. And 0:06:06.600 --> 0:06:09.200 we're not alone. This is happening to the entire industry 0:06:09.320 --> 0:06:12.440 right now. The industry is also dealing with a sea 0:06:12.560 --> 0:06:16.279 change on the labor front. Hourly wages have soared and 0:06:16.320 --> 0:06:20.239 the Great resignation has hit restaurants hard. Labor costs aren't 0:06:20.240 --> 0:06:23.080 going down because of the training and turnover at the 0:06:23.080 --> 0:06:26.200 thirty sixty and ninety d mark. UM. If someone you 0:06:26.200 --> 0:06:28.440 know can even figure the job out, do they stay? 0:06:28.680 --> 0:06:32.520 And and that's still not under control whatsoever. UM. So, 0:06:32.600 --> 0:06:37.080 while maybe like the actual wage inflation can taper, turnover 0:06:37.120 --> 0:06:41.280 and training costs are still elevated. We've invested more than 0:06:41.360 --> 0:06:43.680 ten million dollars in our employees over the past year 0:06:43.720 --> 0:06:46.800 and we're gonna continue to invest more. We're testing four 0:06:46.880 --> 0:06:49.760 day work weeks to help you, especially our working parents, 0:06:49.839 --> 0:06:52.919 kind of juggle that balance between childcare and your work. 0:06:53.279 --> 0:06:54.880 I know I deal with that all the time. This 0:06:54.960 --> 0:06:57.600 is really a people first company. UM. In the even 0:06:57.760 --> 0:07:00.159 an inflationary environment, you're going to see us contain you 0:07:00.240 --> 0:07:02.960 to lead with our people. Do you worry at all 0:07:03.000 --> 0:07:06.120 of that a price wage spiral not just here but 0:07:06.320 --> 0:07:08.640 in the industry, in the economy, Yes, And I think 0:07:08.680 --> 0:07:10.920 that you know this is is something that you know 0:07:11.320 --> 0:07:15.640 many business leaders are focused on um and you know 0:07:15.720 --> 0:07:18.600 time will tell kind of how all of this lands. 0:07:18.640 --> 0:07:21.400 I think the wage probace spiral continues for quite some time, 0:07:21.400 --> 0:07:23.840 and I think we probably have been a lot less 0:07:23.840 --> 0:07:27.880 aggressive than we can be, and then many other companies 0:07:27.880 --> 0:07:30.320 have been in terms of raising crisis. We've taken our time. 0:07:30.360 --> 0:07:32.240 If you look at a twenty year history of pricing 0:07:32.240 --> 0:07:34.600 in this company, we've taken about two percent a year 0:07:34.640 --> 0:07:38.080 on average. We've never taken what we could. We've always 0:07:38.080 --> 0:07:40.320 taken what we should. We have to pay people more. 0:07:40.640 --> 0:07:43.040 We have been and we'll continue to do so. We'll 0:07:43.160 --> 0:07:45.320 take a little bit of a margin compression on that 0:07:45.360 --> 0:07:47.600 as we've had to, and I think that's the right 0:07:47.680 --> 0:07:50.520 thing so that for the long term, shake Chack continues 0:07:50.600 --> 0:07:53.600 to be what we're building, which is the next generations 0:07:53.600 --> 0:07:57.400 burger joint. Shake Jack margins have come down from pre 0:07:57.520 --> 0:08:00.200 pandemic levels at the same time, the companies can act. 0:08:00.280 --> 0:08:04.320 Position has improved during COVID. We actually took two opportunities 0:08:04.480 --> 0:08:06.720 to raise capital. We have a fortress balance sheet like 0:08:06.720 --> 0:08:09.880 we've never had before. Good timing, good planning. So when 0:08:09.920 --> 0:08:12.120 we use that money, we're looking for a great return. 0:08:12.280 --> 0:08:14.840 The area with the highest potential return is right in 0:08:14.960 --> 0:08:20.520 Katie Filgrity's wheelhouse, advancing Shake Shacks digital transformation. It's amazing 0:08:20.640 --> 0:08:22.960 to sit here and think that this is a company 0:08:23.000 --> 0:08:25.760 that had essentially hardly any digital sales prior to the 0:08:25.760 --> 0:08:29.200 pandemic um And when the pandemic hit, we went full 0:08:29.240 --> 0:08:32.200 force on digital with the app, web, with third party 0:08:32.240 --> 0:08:34.880 delivery um And here we are now with you know, 0:08:35.960 --> 0:08:39.560 of our sales still coming from digital channels, even as 0:08:39.600 --> 0:08:42.520 our in shack business has doesn't count the kiosks, right, 0:08:42.679 --> 0:08:45.120 that does not count the kiosk When what kind of 0:08:45.120 --> 0:08:47.120 investment was that? Was it a home run? Is that 0:08:47.240 --> 0:08:50.600 something where you're like, Randy, this paid off big time? Well, 0:08:50.880 --> 0:08:52.719 it's something that we continue to invest in and we 0:08:52.880 --> 0:08:56.240 continue to see opportunities to improve our app, improve that 0:08:56.280 --> 0:08:59.840 guest experience, improve you know, the ways that we're incentive 0:08:59.840 --> 0:09:03.440 by using our guests to really lean into our digital channels. 0:09:03.480 --> 0:09:05.280 If you simply, you know, kind of look at what 0:09:05.440 --> 0:09:09.080 the higher frequency we get from those digital guests, moving 0:09:09.080 --> 0:09:11.960 more and more of them into the channels, and continuing 0:09:12.000 --> 0:09:15.200 to invest to drive frequency of that base. It's a 0:09:15.320 --> 0:09:20.000 really good recipe for strong long term traffic growth. From 0:09:20.040 --> 0:09:23.160 its early days as a kiosk in Manhattan's Madison Square Park, 0:09:23.360 --> 0:09:27.440 Shake Shack's brand has combined simplicity and style. The menu 0:09:27.520 --> 0:09:31.199 features classic items with a creative twist, while the ingredients 0:09:31.200 --> 0:09:34.280 and service are a significant step up from fast food. 0:09:35.480 --> 0:09:39.080 The concept was an instant success, but maintaining growth and 0:09:39.240 --> 0:09:43.280 staying relevant comes to the complex set of pressures. We've 0:09:43.480 --> 0:09:47.280 come out of the pandemic with a new world and 0:09:47.840 --> 0:09:51.720 where something that might have been an evolutionary change has 0:09:51.800 --> 0:09:54.679 been a revolutionary change. We've made changes to the way 0:09:54.720 --> 0:09:57.320 we eat, We've made changes to the way we operate 0:09:57.640 --> 0:10:02.400 that might have taken years have been compressed into months 0:10:02.400 --> 0:10:05.400 and days. The role of CFO in a company like 0:10:05.480 --> 0:10:08.800 ours that's so dynamically growing, so constantly changing and focus 0:10:08.880 --> 0:10:12.079 on digital is critical. Katie plays such an amazing role there. 0:10:12.120 --> 0:10:15.280 She's not just moving numbers around, you know, this is 0:10:15.280 --> 0:10:21.199 not your grandfather's CFO anymore. The digital infrastructure, the way 0:10:21.240 --> 0:10:24.520 we think about things now, is a monster that needs 0:10:24.520 --> 0:10:27.760 to be fed all day long, every day and is 0:10:27.800 --> 0:10:31.360 always hungry. And you could probably have a hundred and 0:10:31.360 --> 0:10:35.360 fifty digital priorities today that all our teams will fight about. 0:10:35.440 --> 0:10:38.880 Ops wants this, tech wants this, Marketing wants this, I 0:10:38.920 --> 0:10:43.040 want this, Katie wants that. Katie's job is to take 0:10:43.160 --> 0:10:48.400 all that prioritization, think it through, understand which one is 0:10:48.400 --> 0:10:50.280 going to have the best return on capital and which 0:10:50.280 --> 0:10:52.520 ones have no return on capital, and you still got 0:10:52.520 --> 0:10:54.839 to do them anyway. That's the reality of the world 0:10:54.880 --> 0:10:58.080 we live in right now, and it's it's critical to 0:10:58.320 --> 0:11:01.560 lead that in the right way. I visited a Manhattan 0:11:01.600 --> 0:11:04.920 Shack with Katie Fogerty. Our first stop inside the restaurant 0:11:05.040 --> 0:11:07.480 was an order in Kiosk, and on the burger side, 0:11:07.480 --> 0:11:09.880 you can see the option here for the bourbon bacon 0:11:10.360 --> 0:11:14.480 jam burger with shallots on top, the avocado bacon burger, 0:11:14.480 --> 0:11:17.600 as well our beloved smoke Shack. The Kiosks are an 0:11:17.640 --> 0:11:20.520 investment in engagement. We just see a guess kind of 0:11:20.520 --> 0:11:23.280 sit with the menu and really appreciate and understand how 0:11:23.320 --> 0:11:26.520 they can customize their order or the different add ons 0:11:26.679 --> 0:11:28.680 um that they have. So we really do believe that 0:11:28.720 --> 0:11:31.640 this provides them with an even better experience than going 0:11:31.679 --> 0:11:34.439 to the cash register. What's the payoff, I mean the 0:11:34.760 --> 0:11:36.679 cost to put one of these in compared to how 0:11:36.760 --> 0:11:40.560 much more a customer spends on the kiosk. We do 0:11:40.679 --> 0:11:43.040 see a very nice lift off of the kiosk um 0:11:43.080 --> 0:11:45.640 And actually this is not even uh, you know, very 0:11:45.679 --> 0:11:48.760 fancy kiosk technology. It's an iPad, what has more investment 0:11:48.800 --> 0:11:51.560 tied to it. It's just the constant innovasions that we've 0:11:51.600 --> 0:11:55.959 had to make the kiosk functionality better and better. And 0:11:56.040 --> 0:11:58.880 you know, we're driving towards kind of a parody situation 0:11:59.000 --> 0:12:02.160 where the key us and the cash register have exactly 0:12:02.200 --> 0:12:05.559 the same functionality, and we want the kiosks to be 0:12:05.600 --> 0:12:08.440 able to identify who you are and what you like 0:12:08.520 --> 0:12:11.960 to order when you come into the shack. Improvements like 0:12:12.040 --> 0:12:16.320 these take resources shake shacks. General and administrative expenses have 0:12:16.520 --> 0:12:20.120 risen as the companies put capital behind digital initiatives and 0:12:20.160 --> 0:12:23.559 the changes ripple out from there. As our digital evolution 0:12:23.880 --> 0:12:26.240 has been underway, we've had to make a number of 0:12:26.280 --> 0:12:29.720 adjustments to the layout of our current existing shack base 0:12:30.080 --> 0:12:33.120 and really rethink the flow of the shacks that we're 0:12:33.120 --> 0:12:36.679 building in order to really capitalize and enable and let 0:12:36.679 --> 0:12:39.760 our digital business thrive. And many shacks we've taken out 0:12:40.040 --> 0:12:42.800 cash registers, We've moved them around. A lot of times 0:12:42.800 --> 0:12:45.280 it's two or three cash registers that are just taken 0:12:45.280 --> 0:12:47.640 down to one. We've had to really rethink the way 0:12:47.679 --> 0:12:50.320 that the flow of our guest journey is in our shack. 0:12:50.440 --> 0:12:52.840 So one perfect example of it is we put in 0:12:52.880 --> 0:12:56.360 pickup shells here UM at most of our restaurants. Guests 0:12:56.360 --> 0:12:59.079 who are looking for that to go experience can come 0:12:59.120 --> 0:13:00.560 in and pick up the work her to go and 0:13:00.600 --> 0:13:02.800 they don't have to sit there and wait with everybody 0:13:02.800 --> 0:13:05.640 else who is who is waiting for their UM, you know, 0:13:05.720 --> 0:13:09.280 food ready to be made. We are constantly monitoring UM 0:13:09.320 --> 0:13:12.679 and identifying ways to be better in the kitchen UM 0:13:12.720 --> 0:13:15.079 and it also goes down to the products and the 0:13:15.480 --> 0:13:18.200 types of offerings that we have. You know, we never 0:13:18.240 --> 0:13:21.080 want to have something that is going to overly complicate 0:13:21.080 --> 0:13:23.720 our team member's journey. UM. We don't want to have 0:13:23.760 --> 0:13:26.560 something that's going to slow us down operationally. So you'll 0:13:26.559 --> 0:13:28.040 see a lot of our l t O is just 0:13:28.040 --> 0:13:31.600 really be building for menu ingredients and allowing our teams 0:13:31.600 --> 0:13:33.600 to kind of do a little bit, you know, different 0:13:33.640 --> 0:13:37.600 with what we already have LTO stands for limited time offer. 0:13:37.880 --> 0:13:41.080 It might be a special shake flavor, or partnerships like 0:13:41.120 --> 0:13:45.000 a recent venture with distiller Maker's Mark. But Shakeshac's core 0:13:45.040 --> 0:13:48.120 offering is the burger, and it's not just any burger. 0:13:48.200 --> 0:13:51.400 The company pledges the source premium meat that's ethically raised 0:13:51.679 --> 0:13:55.040 and cost more even when inflation is not at historic levels. 0:13:55.480 --> 0:13:58.040 I've heard a lot about the importance of the quality 0:13:58.200 --> 0:14:01.200 to you guys in terms of ingredients. Doesn't that get expensive, 0:14:01.280 --> 0:14:04.800 especially right now? Quality beef must be uh, you know, 0:14:04.920 --> 0:14:08.520 in rising rising in terms of price. I mean, we've 0:14:08.559 --> 0:14:11.720 always used premium ingredients, and those premium ingredients they come 0:14:11.720 --> 0:14:13.880 at a higher price. We always have an eye on 0:14:14.120 --> 0:14:16.520 the margin um, but we know also at the end 0:14:16.559 --> 0:14:18.440 of the day, you're running a very dangerous game. If 0:14:18.480 --> 0:14:22.120 you're trying to reverse engineer into something that you know 0:14:22.200 --> 0:14:24.160 you want from a p m L standpoint, the guests 0:14:24.240 --> 0:14:28.760 might not like it. J Chack standing firm on quality. 0:14:29.080 --> 0:14:33.240 It's also practicing transparency. Announcing plans to raise menu prices 0:14:33.280 --> 0:14:35.560 by five to seven percent in the fourth quarter of 0:14:37.000 --> 0:14:41.480 shake Shack is the best example the definition of a 0:14:41.520 --> 0:14:48.960 fantastic value proposition. However, not all customers across this country 0:14:49.560 --> 0:14:52.640 have you know, that change in their pocket to pay 0:14:52.680 --> 0:14:54.800 for that average to get at lunch or dinner. And 0:14:54.840 --> 0:14:57.520 I think they're very comfortable with that, and I think 0:14:57.560 --> 0:15:02.760 it's very interesting and very different than what others are doing. 0:15:03.000 --> 0:15:05.240 I mean, it is who they are. They're not trying 0:15:05.280 --> 0:15:07.560 to escape it. They're not trying to be something they're not. 0:15:08.440 --> 0:15:10.320 And the fact of the matter is if they picked 0:15:10.320 --> 0:15:12.880 a different path, and it's fine, it would be hard 0:15:12.920 --> 0:15:17.720 to pivot back. We are serving fresh home muscle hormone 0:15:17.720 --> 0:15:21.040 antibiotic free beef. That is a totally different thing than 0:15:21.080 --> 0:15:24.240 you're going to eat at nearly all other restaurants, certainly 0:15:24.400 --> 0:15:26.560 traditional fast food, and you've got to pay more for that, 0:15:26.640 --> 0:15:29.000 and you should want to. And when you see things 0:15:29.160 --> 0:15:33.400 like ten for dollar or two for five dollars, we 0:15:33.560 --> 0:15:37.840 can't do that because our ingredients cost more than that 0:15:37.920 --> 0:15:39.480 to bring it to you, and you should want to 0:15:39.520 --> 0:15:42.160 pay more for that. And frankly, who am I to 0:15:42.280 --> 0:15:46.360 argue from still crunchy to big until crunchy. I like that, 0:15:46.560 --> 0:15:54.040 it's delicious. I might finish this. Nearly of Shakeshack locations 0:15:54.120 --> 0:15:57.480 in the US, our company operated around the world. It's 0:15:57.520 --> 0:16:01.400 a different story. The business has grown internationally by working 0:16:01.400 --> 0:16:04.960 with licensed partners to operate restaurants. That's a trend they 0:16:04.960 --> 0:16:08.080 intend to keep going. Today we have shake Jacks in 0:16:08.200 --> 0:16:12.560 sixteen countries everywhere from China to Singapore, to the Philippines 0:16:12.920 --> 0:16:15.920 to London and beyond. We see it. There's a huge 0:16:15.920 --> 0:16:20.000 white space opportunity for US. Many restaurant brands struggle to 0:16:20.160 --> 0:16:23.640 move outside of their own core market in the United States. 0:16:23.960 --> 0:16:26.440 Perhaps it's something that's very New England, and when they 0:16:26.440 --> 0:16:28.680 try to move outside of the New England area, guest 0:16:28.720 --> 0:16:31.280 reception is just not there. Or it's a West Coast 0:16:31.280 --> 0:16:34.920 brand that takes fifty years to bleed across the country. 0:16:35.160 --> 0:16:37.800 The thing about shake Shack and the magic about it 0:16:37.880 --> 0:16:40.640 is this is a company that can sit here with 0:16:40.760 --> 0:16:45.320 only two hundred restaurants in the US today, open up 0:16:45.360 --> 0:16:48.760 one in a Tier two city in China and the 0:16:49.040 --> 0:16:53.040 guest reception for that restaurant is mind blowing. These are 0:16:53.040 --> 0:16:56.320 some of the largest opens that we've ever had. We 0:16:56.360 --> 0:16:59.000 have big plans for our licensed business. It's a really 0:16:59.120 --> 0:17:02.320 asset light ashecretive business for us. We love it and 0:17:02.440 --> 0:17:04.440 we love it when our partners overseas make a ton 0:17:04.440 --> 0:17:06.480 of money because they're gonna build more restaurants. We're gonna 0:17:06.480 --> 0:17:09.080 all continue to grow. I mean, there's so many opportunities 0:17:09.119 --> 0:17:12.680 for us to add to our licensed business. And certainly 0:17:12.920 --> 0:17:15.480 I get so many text messages from people traveling the 0:17:15.520 --> 0:17:18.280 world if there is a shake Shack there, guess which 0:17:18.320 --> 0:17:20.480 one this one is? And if there's not one, why 0:17:20.480 --> 0:17:23.399 don't you have one here? The first shake Shack in 0:17:23.480 --> 0:17:26.239 mainland China open in two thousand nineteen, and there are 0:17:26.280 --> 0:17:30.080 now more than twenty. Although the government zero COVID policy 0:17:30.119 --> 0:17:33.159 has weighed on revenues, the company is committed to expanding 0:17:33.160 --> 0:17:36.880 its presence. China is a fascinating business for us. It's 0:17:36.880 --> 0:17:39.920 it's one of the most exciting, biggest opportunity to Shapshack 0:17:39.960 --> 0:17:42.800 has over the initial a couple of years of the pandemic, 0:17:43.240 --> 0:17:45.800 they fared much better than we did here and much 0:17:45.840 --> 0:17:48.960 better than most places around the world. Today. It has 0:17:49.000 --> 0:17:52.760 been erratic, it's been lockdowns, it's been closures. But here's 0:17:52.760 --> 0:17:56.720 what's Here's what's amazing. The resiliency of the Chinese people. 0:17:57.400 --> 0:18:01.399 Our team over there is unlike anything I've witness. It 0:18:01.480 --> 0:18:03.199 is one of the toughest places to do business in 0:18:03.240 --> 0:18:06.680 the world. But our brand seems to be really resoning 0:18:06.680 --> 0:18:09.000 with people over there right now, and I see it 0:18:09.040 --> 0:18:10.439 as one of the biggest areas of growth. We have 0:18:10.480 --> 0:18:14.920 a shape chair. Restaurants haven't been resonating with Wall Street recently. 0:18:15.200 --> 0:18:18.359 The sector has underperformed the SMP five for much of 0:18:18.400 --> 0:18:22.840 twenty two, but the industry is historically resilient. Restaurants are 0:18:22.920 --> 0:18:27.160 undervalued right now. As a person who has been following 0:18:27.240 --> 0:18:31.560 restaurants since I had hair, I think restaurants are probably 0:18:32.240 --> 0:18:37.439 the most flexible and most creative of businesses that we have. 0:18:37.800 --> 0:18:40.479 The routine and the social engagement happens at restaurants and 0:18:40.520 --> 0:18:43.000 that's not changing. Just because we may or may not 0:18:43.080 --> 0:18:45.520 go into the recession, it just isn't going to change, 0:18:45.560 --> 0:18:48.800 and so the restaurant stocks will rebound. This industry is 0:18:48.840 --> 0:18:52.439 the third largest employer, you know, all the population of 0:18:52.480 --> 0:18:55.719 workers in this country. This is like the fabric of 0:18:56.720 --> 0:19:01.320 the economy and the economy will rebound and restaurant stocks 0:19:01.320 --> 0:19:03.840 will go up. If you want to trade in and 0:19:03.840 --> 0:19:06.880 out of shake Shack, you know you you just may 0:19:06.920 --> 0:19:08.560 not be the time for you. If you are a 0:19:08.600 --> 0:19:11.800 believer in the brand of shake Shack for the long term, 0:19:11.920 --> 0:19:14.560 like we are and have been, We're going to create 0:19:14.560 --> 0:19:17.320 tremendous value for our shareholders over time. We've done that. 0:19:17.560 --> 0:19:20.399 Shareholders should measure us on are we building things for 0:19:20.440 --> 0:19:23.159 the long term? And from me here for the long term, 0:19:23.280 --> 0:19:26.000 my senses, shake Shacks will be good bet. One of 0:19:26.040 --> 0:19:28.960 shake Shack's long term assets is a bright new CFO, 0:19:29.320 --> 0:19:32.399 Katie Fogerty, now has a year of experience under her belt. 0:19:32.600 --> 0:19:35.199 I wanted to know what she sees when she looks ahead. 0:19:35.560 --> 0:19:38.600 What's the opportunity for shake Shack in the next ten 0:19:38.720 --> 0:19:41.440 years that excites you the most? I have to say 0:19:41.520 --> 0:19:45.240 it is in watching our people grow and develop. Um 0:19:45.280 --> 0:19:48.480 I see a very strong growth roadmap here for the 0:19:48.480 --> 0:19:51.919 company in terms of units and and sales potential. But 0:19:52.000 --> 0:19:53.600 what that really means at the end of the day 0:19:53.840 --> 0:19:57.240 is that our hourly team members are able to grow 0:19:57.359 --> 0:19:59.560 a career with us in a way that it's unique 0:19:59.560 --> 0:20:02.080 to shake Chack and cannot be found at many other 0:20:02.160 --> 0:20:04.879 restaurant brands. We have a number of people who started 0:20:04.920 --> 0:20:07.280 off as hourly team members and are now making six 0:20:07.320 --> 0:20:10.679 figures and have equity because they've grown up through this 0:20:10.920 --> 0:20:13.760 the system and they're paying it forward by training other 0:20:13.840 --> 0:20:16.680 people to allow them to have such a great career 0:20:16.680 --> 0:20:19.040 path as well. What's the challenge over the next ten 0:20:19.119 --> 0:20:21.680 years that keeps you up at night? It also goes 0:20:21.720 --> 0:20:24.680 with people. UM. It has been a very challenging staffing 0:20:24.800 --> 0:20:28.000 environment for the restaurant industry as a whole. UM. It's 0:20:28.040 --> 0:20:30.239 been well telegraphed that you know, some people have just 0:20:30.359 --> 0:20:33.760 left the industry altogether. UM. And so you know, we 0:20:33.840 --> 0:20:36.320 know when we have high turnover, we're not operating at 0:20:36.359 --> 0:20:38.720 our best UM. And so I do think that there's 0:20:38.720 --> 0:20:42.240 an amazing opportunity that once kind of the world stabilizes 0:20:42.280 --> 0:20:45.720 and returns you back to normal UM, that we have 0:20:45.840 --> 0:20:50.480 people considering the restaurant industry as more of an exciting 0:20:50.520 --> 0:20:54.320 long term career. In terms of your role as CFO, 0:20:54.440 --> 0:20:56.520 how do you see that or your role with this 0:20:56.600 --> 0:20:59.679 company changing and developing over the next ten years. I 0:20:59.720 --> 0:21:02.840 think that you know, it becomes ever more important to 0:21:03.000 --> 0:21:07.639 have a great grasp on the insights that are driving business, 0:21:07.720 --> 0:21:11.800 on the factors that are driving your business UM, and 0:21:12.040 --> 0:21:14.520 you know that's very important for CFO to do, but 0:21:14.600 --> 0:21:17.520 also to collaborate with other business leaders within the company 0:21:18.000 --> 0:21:21.040 UM to help, you know, kind of cross pollinate strategies. 0:21:21.400 --> 0:21:23.320 You know, whatever I do in a vacuum is not 0:21:23.359 --> 0:21:26.000 going to be nearly as impactful as our entire executive 0:21:26.080 --> 0:21:29.439 leadership team coming together and acting on something. And I 0:21:29.480 --> 0:21:32.439 think that that is ever more apparent sitting on this 0:21:32.480 --> 0:21:34.960 side of the table than it was on the other 0:21:35.000 --> 0:21:37.840 side as a well street analyst. Speaking of that, what 0:21:38.080 --> 0:21:40.840 skill or what area of knowledge do you think has 0:21:40.880 --> 0:21:43.480 helped you the most in your first year of CFO 0:21:44.200 --> 0:21:46.960 m hm. I would say just a lot of grit. 0:21:47.320 --> 0:21:50.480 This has been a very challenging industry for sure. UM. 0:21:50.520 --> 0:21:52.199 I never thought it was going to be easy, and 0:21:52.280 --> 0:21:54.919